Irish tech firms await news of their deposits following SVB collapse

Department of Finance says it is monitoring developments as a buyer is sought for the bank

Silicon Valley Bank was a lender to some Irish companies since 2012.

A number of Irish tech firms are awaiting news of the sale of the Silicon Valley Bank (SVB) in the US following the rapid collapse of the lender and investor which did significant business with Irish startups.

SVB collapsed into receivership on Friday, after its long-established customer base of tech startups grew concerned and began withdrawing deposits. US regulators overseeing the emergency breakup of the group are now racing to sell assets to make a portion of clients’ uninsured deposits available as soon as today (Monday). Receivers have also kicked off an auction process over the weekend seeking a buyer for the bank.

The US treasury secretary, Janet Yellen, said yesterday there would be no bailout for the bank but the US government is understood to be focused on protecting depositors. 

SVB had a presence in Ireland and the UK and was seen as the first port of call for many Irish companies expanding into the US. Along with holding company funds, SVB provided backing to a number of tech startups. The Ireland Strategic Investment Fund (ISIF) also has a $100m (€93.9m) investment in five funds managed by a subsidiary of the SVB Financial Group. It said it does not expect any negative impact from the bank's collapse.

The UK government was drawing up plans for an emergency cash lifeline for its tech firms hit by the collapse. The Department of Finance here told the Irish Examiner it is monitoring developments regarding the collapse of SVB and engaging with the relevant authorities.

"While there is limited direct impact on the Irish financial system, Silicon Valley Bank was a lender to some Irish companies since 2012," a spokesperson said.

"The Department will monitor the progress of the Federal Deposit Insurance Corporation (FDIC), the US Government agency that guarantees bank deposits, in its sale of SVB and what impact that may have on domestic companies impacted by this failure."

DC Cahalane of Dogpatch Labs which operates the NDRC national accelerator programme for startup firms said they are aware of some Irish tech firms who have funds on deposit with SVB and have not yet been able to withdraw them.

"The next 72 hours will tell a lot. Deposits up to $250,000 are guaranteed but it is what happens to deposits above that level which remains to be seen," he said. "In Dogpatch we have about 140 startups in our portfolio and have been in contact with many of them over the weekend and will speak to more of them on Monday morning."

"It is a very difficult time. SVB was very active here and for Irish companies expanding to the US they were generally the first choice bank. They also back a number of companies here. They have always been an incredibly positive influence in the Irish tech sector."

Cork entrepreneur Pat Phelan the CEO of the Sisu Clinic chain which has expanded in the US in recent years said his firm was able to withdraw much of their funds last week and has been assisting other Irish companies attempting to access their deposits.

"SISU had multiple millions on deposit with SVB. I got nervous last week from the comments they were making and went the stock dropped 60% on Thursday I contacted our CFO to get our money out which we did, all but €250,000 which is guaranteed," he said.

Cork entrepreneur Pat Phelan the CEO of the Sisu Clinic chain said the company had multiple millions on deposit with SVB.

"I know of at least three other Irish firms that have between €5m and €10m on deposit who are trying to withdraw it. It's difficult to underestimate the impact this collapse will have. If we had been unable to withdraw our deposits it would have completely halted all of our current expansion plans."

"SVB was also the defacto lender for startups. Most investments these days are a mix of debt and equity and I'd say in six out of 10 cases, SVB provided the debt. They were great to work with," Phelan said.

"For many startups, you would have borrowed from them, they invested in and you put your money on deposit with them. That's all gone," he said.

Other firms with significant deposits with SVB include video streaming firm Roku which has $487m on deposit and computer games maker Roblox with $150m.